Assessing Access Network Market Power

Abstract

Interconnection agreements in the telecommunications industry have always been constrained by regulation, but Internet interconnection has not received the same level of scrutiny. Recent debates regarding proposed mergers, network neutrality, Internet peering, and last mile competition have generated much discussion about whether Internet interconnection regulation is warranted.Concerns about network market power are not limited to those network providers at the top of the Internet hierarchy. In recent years, the concerns have actually shifted from the backbone providers at the core of the Internet to the access networks at the edge. Limited access network competition can not only impact consumer pricing or increase the likelihood of harmful discrimination, it can also lead to unfair interconnection practices. Recent interconnection disputes have generated questions about whether the concentration in access networks impacts the ability of other network providers to deliver traffic to those end users. This concern is not restricted to interconnection between access networks and upstream networks. Due to the emergence of “hyper giants” who are responsible for a large percentage of Internet traffic, it extends to the relationships between access networks and pure play CDNs as well as access networks and large content providers. In order to determine whether regulation is necessary, policymakers need appropriate metrics to help gauge a network provider’s market power. The metrics used to assess backbone network market power may not be as relevant for access networks. Ideally, policymakers would have access to Internet interconnection agreements as these reflect a network’s bargaining power. Unfortunately these are not typically publicly available. Policymakers must instead rely on proxy metrics and inferred interconnection relationships. This paper proposes a new metric, access variance, for assessing access network market power. This metric is defined as the diversity of feasible paths into an access network and can provide a useful assessment of access network’s ability to control access to its end users.Content delivery networks (CDNs) may provide some visibility into an access network's access variance. A CDN will typically distribute requests from an access network's end users across multiple deployments depending on factors such as performance and cost. While some of these deployments may be located within the access network, other deployments may be in upstream networks that have interconnection agreements with the access network. This access variance can help ascertain the diversity of access methods other than establishing an interconnection agreement directly with the access network. The paper provides an empirical example analyzing whether a CDN has alternative options for reaching an access network’s end users. The example focuses on France as the French ISPs have publicly stated their intention to limit CDN access if they are not compensated according to their terms. By analyzing the CDN traffic flows in France, we can determine the extent of the French ISPs’ ability to restrict access. If a CDN is either unable to deliver content to an access network’s end users or is only able to deliver content to those users from its deployments within the access network, this may suggest that the access network is able to control access to its subscribers. The analysis involves identifying the DNS nameservers associated with the French ISPs and issuing requests for CDN content from those nameservers. The resulting server IP addresses are recorded and analyzed to map the CDN deployments responding to those requests. In this analysis, the CDN deployments within the access networks served less than 50% of the requests originating from the access networks’ on-network nameservers. This suggests that there are viable alternatives to establishing interconnection agreements directly with the access networks.